We are aware that many economic indicators are currently blinking red—like rising interest rates, surging inflation, and stalling housing starts. There is ample reason to be concerned.
But, as a class, real estate investors are uniquely positioned to ride out this storm relatively unscathed. This is particularly true if investors choose their next projects carefully. Investors who do their research have the opportunity to choose markets where housing inventory is particularly low—making future price drops more unlikely.
Fortune compared housing inventory levels across the country to determine which cities had the biggest declines from 2020 to 2022. They noted the following four cities with unusually tight markets, each declining at double digit rates:
Raleigh, NC—This market saw a 69.7% decline in houses on the market between 2020 and 2022.
Hartford, CT—Hartford was not far behind with a reduction in inventory of 63% from 2020 to 2022.
Providence, RI–The decline in homes for sales was also steep in Providence, reaching a 61.8% drop from 2020 levels.
Miami, FL—Rounding out the top four was Miami with a 61% decrease in housing inventory from 2020 to 2022.
Although tight housing supply is bad news for potential buyers, it can be a boon for real estate investors, especially if your strategy is to fix and flip the property. It means that ARVs should remain fairly stable as demand outpaces supply. Of course, each project should be evaluated on its own merits to ensure that the numbers add up to a real profit. Be sure to use an appraiser that you know and trust, and who understands your market.
Want to discuss your next project with us? We are always available. Reach out at info@gonavcap.com or 888.444.3160.